[Direct answer]In the Beijing area, after-sales leaseback is recognized as a loan, which does not mean that the contract is "invalid", but that the court recognizes it as a loan contract relationship based on the true intention of both parties, and the relevant rights and obligations are handled in accordance with the rules of lending. According to the "Interpretation of the Supreme People's Court on Legal Issues Applicable to the Trials of Disputes over Financial Leasing Contracts" (amended on December 23, 2020), if a contract is named as a financial leasing contract but does not actually constitute a financial leasing legal relationship, the people's court shall handle it in accordance with the actual legal relationship it constitutes. The key distinction lies in whether the leased object truly transfers possession and ownership, and whether the rent is essentially used to repay the principal and pay interest. After being recognized as a loan, attention should be focused on the actual principal, interest rate cap, and repayment responsibilities to avoid being held accountable for high rents or penalties. It is recommended to combine this withFinancial capital and cross-border legal services involving foreign affairsEvaluate the response plan.

I. Problem Background and Typical Scenarios

After-sales leaseback is a common financing method used by enterprises: the enterprise "sells" its own equipment and real estate to a financial leasing company, then leases them back for use and pays the rent in installments. However, when the value of the leased assets is obviously overstated, the ownership and possession have not been truly transferred, or the rent constitutes "principal plus fixed interest", the court may determine that the parties do not have a true lease intention, and it is essentially a loan. Typical scenarios include: the subject matter is an asset that has been mortgaged or is difficult to specify, the transaction price deviates significantly from the appraised value, the contract simultaneously stipulates the repurchase at maturity and does not calculate depreciation; and the lessor actually engages in lending business but evades supervision under the guise of leasing. When handling similar cases in the Beijing area, the court will focus on reviewing the ownership and possession changes of the subject matter, the logic of rent calculation, and then determine the true legal relationship. For cases involving the nature of the contract, it can be combined with other evidence to determine the nature of the contract.Business and contract dispute services for enterprisesCoordinated analysis.

II. Key points of contention

The focus of the dispute lies in three aspects. Firstly, the nature of the legal relationship: whether the seller and the lessee are the same person, whether the leased property is truly specified and delivered for possession, and whether the rent corresponds to the use and benefits. This is the core of determining whether it is a financial lease or a loan. According to the judicial interpretation, the mere fact that the lessee and the seller are the same does not necessarily negate the existence of a financial lease. However, if there is no genuine intention of sale and lease, it shall be treated as a loan. Secondly, the recovery of the principal and interest: after being identified as a loan, the actual funds lent shall be used as the principal, and the actual interest rate shall be calculated based on all fees to determine whether it exceeds the judicial protection cap. Thirdly, the effectiveness of the guarantee and ancillary contracts: when the lease is in fact a loan, how to connect the relevant provisions of guarantee, repurchase, and deposit shall be determined on a case-by-case basis. For cases involving creditor's rights confirmation, reference can be made to the relevant provisions of the Civil Code.Creditor-debtor relations and enforcement case services.

III. Professional analysis by Hengluo Lawyers

Based on practical observations in handling financing-related disputes, the most common problem with post-sale leasebacks being deemed loans is "evidence reconstruction": many transaction documents state that it is a lease, but the payment, invoices, and possession status indicate that it is actually a loan. The court therefore determines the true nature of the transaction based on this evidence. According to the provisions of the Civil Code (implemented on January 1, 2021) on contract validity and loan contracts, as well as the aforementioned judicial interpretations on financial leasing, the court will make a determination based on the ownership of the leased object, its value, the composition of the rent, and the rights and obligations of the parties. Hengluo Lawyers typically recommend the following: before the transaction, finalize the list of leased assets, their appraised value, and delivery certificates to avoid the risk of "leasing in name but lending in reality"; after a dispute arises, organize evidence around the actual principal, interest rate, and fees, and, if necessary, assert rights or defend against excessive rent claims based on the lending relationship. For major equipment assets, it may be necessary to proceed with subsequent legal actions.Real estate sales and construction project servicesClarify the ownership rights.

IV. Practical suggestions and legal basis

The legal basis includes the relevant provisions of Chapter XIII of the Civil Code (effective from January 1, 2021) on loan contracts and financing lease contracts; Article 1 (dealing with the actual relationship when it does not constitute financing lease) and Article 2 (identifying after-sale leaseback) of the Interpretation of the Supreme People's Court on Legal Issues Applicable to the Trials of Disputes over Financing Lease Contracts (amended on December 23, 2020); and the protection rules for private lending interest rates. Practical suggestions: Before signing the contract, ensure that the leased assets are genuine and specific, and handle the transfer of ownership and possession; avoid the appearance of a loan with a "fixed return plus maturity repurchase" in the rent clause; after a dispute arises, fix the payment records, appraisal reports, and communication records, and calculate the responsibilities based on the actual principal and legal interest rates; when necessary, safeguard rights through litigation or defense. For issues involving regulatory boundaries, refer to the relevant provisions.Financial capital and cross-border legal services involving foreign affairsEvaluation.

5. Henglu Law Firm's Advice

It's not terrible that after-sales leaseback is deemed a loan, but the key is to clarify "how much was actually borrowed, how much should be repaid, and whether the interest rate is legal". The first step is to organize all payment receipts and expense lists to restore the actual principal; the second step is to calculate whether the comprehensive cost exceeds the judicial protection cap, and the excess part will not be supported according to law; the third step is to raise defenses against unreasonable rents, penalties or repurchase obligations. Don't give up on your claims just because of the change in the nature of the transaction, and don't be misled by the misconception that "if the contract says it's a lease, it should be treated as a lease". If litigation is necessary, you can seek legal assistance.Special services and other case servicesDevelop a plan to keep responsibilities and costs within a reasonable range.

VI. Frequently Asked Questions

Q1: If after-sales leaseback is deemed a loan, will it be more beneficial or less beneficial for me?

It's not as simple as saying it's beneficial or not. It depends on whether you're in the position of a seller or a lessor, and on the specific terms of the contract. For lessees, being classified as a loan may help them avoid high "rent" and penalty fees, and the excess amount beyond the principal and legal interest will not be protected. However, if they originally intended to use the tax benefits or asset arrangements of leasing, the purpose of the transaction will be thwarted. For lessors, being classified as a loan means they can no longer claim lease benefits such as the purchase price and nominal ownership, and can only claim the principal and interest. The key lies in whether the actual principal and interest rate comply with regulations. If the interest rate does not exceed the cap and the procedures are clear, the loan relationship can still be protected. If the name of leasing is used to disguise high-interest lending, the excess amount will be excluded. It is recommended to review the contract terms and actual performance, and then let a lawyer evaluate the net effect after classification before making a decision.

Q2: Whether the claim is for financial leasing or borrowing, what evidence do I need to prepare?

The core evidence includes: the finance lease contract and the sales contract (to prove the agreement between the two parties), the list of leased assets, invoices and ownership registration or delivery certificates (to prove whether the subject matter is truly specified and the possession has been transferred), payment and receipt records (to prove the actual amount of funds raised), rent calculation tables and repayment records (to prove whether the rent is actually used to repay the principal and interest), asset evaluation reports (to prove whether the transaction price is reasonable), and communication records between the two parties. The organization of evidence should focus on three points: "whether there is a genuine intention of sale and lease, the actual principal amount, and whether the comprehensive cost is excessive". The more complete the materials are, the more favorable the qualitative analysis will be. It is recommended to establish a special evidence booklet to avoid the other party splitting the evidence against you.

Q3: How much do lawyers' fees and litigation costs amount to for such qualitative disputes that go to court?

The litigation fees shall be paid in accordance with the "Measures for the Payment of Litigation Fees" and calculated cumulatively based on the amount of the litigation request. The losing party shall bear the fees or share them proportionally. In such cases, the fees are usually calculated based on the principal amount of the dispute or the interest involved. The attorney's fees depend on the complexity of the case, the amount of the dispute, and the workload. They may be charged on a per-case, hourly, or percentage basis, with the specific rates determined by the contract of engagement and not subject to unified government pricing. It is recommended to consult a lawyer before filing a lawsuit or defending against a lawsuit to assess the probability of success and the potential recovery amount, and to balance the litigation fees, attorney's fees, and the outcome. For clearly unfounded high-value claims, it is necessary to vigorously defend against them to avoid wasting resources. For cases involving an enterprise's major assets, it is advisable to require the law firm to provide a detailed breakdown of the fees and milestone targets.

Q4: Regarding the qualification dispute of after-sales leaseback, how long does it usually take for a lawsuit to reach a conclusion?

The first-instance ordinary procedure generally concludes within six months, and the summary procedure within three months; such cases often apply the ordinary procedure due to the large amount of the subject matter and the need to evaluate or retrieve ownership information, which results in a relatively long cycle. If one party appeals, the second-instance procedure generally takes three months. After the judgment takes effect and enters the enforcement stage, the repayment time depends on the other party's financial status. Overall, it often takes several months from filing the case to clarifying the nature of the case, and complex cases may take even longer. It is recommended to apply for property preservation simultaneously during the litigation process, freeze the other party's accounts or seize the subject matter, which can not only prevent the transfer of assets but also increase the possibility of mediation and shorten the actual disposal cycle.

Q5: I've already been identified as having borrowed money. What exactly should I do next?

It is recommended to follow four steps: First, sort out all payment and expense vouchers, confirm the principal based on the actual funds raised, and remove disguised charges such as upfront interest and inflated service fees; Second, calculate whether the comprehensive interest rate exceeds the judicial protection cap, and refuse to pay the excess portion according to law and claim offset in litigation; Third, recharacterize the penalties, purchase prices, and deposits under the original lease agreement as loan relationships and raise defenses or counterclaims; Fourth, if no agreement can be reached, file a lawsuit or defend against the lawsuit within the statute of limitations and apply for property preservation. Throughout the process, keep contracts, transaction records, and communication records, and, if necessary, hire a lawyer to collect evidence and draft legal documents to ensure that responsibilities and costs can be controlled.

The above Q&A is mainly based on the judicial practice in the Beijing area. There may be differences in the adjudication opinions in different regions. It is recommended to consult a professional lawyer based on the specific circumstances of the case.

If you are currently facing similar problems, it is recommended that you consult a professional lawyer as soon as possible with the relevant evidence materials, to avoid missing the statutory time limits.Financial capital legal services·Beijing Henglu Law Firm

Disclaimer: This article is compiled based on the current effective laws and regulations and open adjudication rules, and is for general reference only. It does not constitute a formal legal opinion on specific cases. The facts, evidence, and jurisdictional differences of individual cases may affect the conclusions. In case of disputes, please consult a practicing lawyer in time.